Orvana FY 2022 Guidance versus FY 2022 Mine Planall,
Management’s guidance for Orovalle dropped the upper and lower range on gold production by 2,000 ounces going from 50,000 ounces to 48,000 ounces on the lower end and from 55,000 ounces to 53,000 ounces at the upper end. Management guidance for copper also dropped by 1.2 million pounds on the low end and 2 million pounds at the upper end.
The FY2021 mine plan called for an average gold head grade of 2.64 g/t corresponding with 54,920 ounces of gold production for 2021 consistent with the upper end of FY 2021 guidance. Actual gold average head grade for FY 2021 was 2.45 g/t and actual gold production was 47,413 ounces and missed the lower end of guidance by 15 percent or 2,600 ounces mostly due to the 20 day FQ4 plant shutdown.
FY2021 copper production was 18 percent above the FY2021 mine plan, and average copper head grade was 0.53 percent instead of the 0.42 percent called for by the mine plan.
For FY 2022, the mine plan called for gold grades to increase from 2.64 g/t to 2.93 g/t implying a 5,000 ounce gold production increase from 2021 to 2022. Likewise copper head grades and copper production was forecast to increase from 0.42 percent to 0.47 percent an increase of 700,000 pounds in the amount of copper produced. Actual FY 2021 copper production of 6.3 million pounds was already .35 million pounds higher than the FY 2022 mine plan, and the average copper head grade was 0.53 percent.
The following tables show the mine plans for FY 2021 and FY 2022 published in December 2020.
| Table 1-3 Life of Mine Plan Orovalle FY 2021 | | | | | | |
| Ore Milled | 704000 | t | In Situ Metal | Recovery | Metal Production | Quarterly Plan | | | Percent of Planned Production |
| Au | 2.64 | g/t | 59,761 | 91.9% | 54,920 | 13,730 | | -2,073 | 84.9% |
| Ag | 8.42 | g/t | 190,601 | 76.0% | 144,856 | 36,214 | | 5,393 | 114.9% |
| Cu | 0.42 | % | 6,516,787 | 82.3% | 5,363,316 | 1,340,829 | | | 117.7% |
| Table 1-3 Life of Mine Plan Orovalle FY 2022 | | | |
| Ore Milled | 698000 | t | In Situ Metal | Recovery | Metal Production | Quarterly Plan |
| Au | 2.93 | g/t | 65,760 | 91.9% | 60,434 | 15,108 |
| Ag | 9.76 | g/t | 219,051 | 76.0% | 166,479 | 41,620 |
| Cu | 0.47 | % | 7,230,442 | 82.3% | 5,950,654 | 1,487,664 |
So for FY 2022, given that Orovalle has a stockpile of 20,000 to 40,000 metric tons of ore mined during the 20 day shutdown, which gold production number is more likely—Juan Gavidia’s FY 2022 guidance of 48-53k ounces of gold or the FY 2022 mine plan which calls for production of 60,434 ounces? The following table shows the year over year changes in throughput, metal prices in percentage terms from fiscal year 2020 to fiscal year 2021 at Orovalle.
- Actual metal sales were down 12 percent in gold, up 15.3 percent in silver, and up 14.6 percent in copper.
- Overall plant throughput was up 3.5 percent from 2020 to 2021.
- The real story here is a small 10.3 percent increase in the average realized price for gold,
- but a big 41 percent increase in the by product silver, and
- a huge 54.9 percent increase in the realized price for copper.
When one combines changes in production by changes in metal prices, the bottom line is a small 2 percent drop in gold revenue, but a big up change of 62.5 percent in silver and a huge 77.5 percent increase in copper by product revenue.
So one of the positive attributes of Orvana Minerals stock (ORV.TO on the TSX and ORVMF in the USA) is that Orvana has been able to grow revenue in spite of the sideways consolidation in the gold price thanks to the significant copper and silver by product metals contained in the deposit at Orovalle.
I would expect to see further changes in the 5 to 10 year mine plan to promote increased copper production in the upcoming 43-101 report update.
Year over Year Change | | |
| 2020 to 2021 | Production | Prices | Net Change |
| Ore Milled | 103.5% | | |
| Gold | 88.9% | 110.3% | 98.1% |
| Silver | 115.3% | 141.0% | 162.5% |
| Copper | 114.6% | 154.9% | 177.5% |
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| | | | 2020 | Quarterly Metal Sales | | | | | | | | | | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Metal Sales | Metal Price | Revenue | | | Ore Milled | 633765 | 155662 | 148339 | 163717 | 166047 | 633765 | | | | | Au | 2.57 | 16006 | 12216 | 9681 | 14554 | 52457 | | | | | Ag | 7.08 | 30979 | 38053 | 31121 | 44205 | 144358 | | | | | Cu | 0.39 | 1051000 | 1413000 | 1077000 | 1971000 | 5512000 | | | | | | | | | | | | | | | | Au Head Grade (g/t) | 2.98 | 2.74 | 2.43 | 2.7 | 2.71 | $1,649.00 | $86,501,593 | 83.11% | | Ag By Product Revenue | 488 | 548 | 482 | 1038 | 2555 | $17.70 | $2,555,000 | 2.45% | | Cu By Product Revenue | 2289 | 3245 | 2909 | 5981 | 15024 | $2.73 | $15,024,000 | 14.43% | | | | | | | | | | $104,080,593 | | | | | | | | | | | $8,889,000 | | | | | | | | $95,191,593 | | | | | | | | | | |
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| | | | | Quarterly Metal Sales | | | | | | | | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Metal Sales | Q4 2021 Actual | | Ore Milled | 655866 | 180380 | 159603 | 181258 | 134626 | 655867 | | | | Au | 2.41 | 12085 | 8523 | 14520 | 11500 | 46628 | 8650 | 11,121 | | Ag | 10.38 | 55333 | 35206 | 43325 | 32563 | 166427 | 32563 | 41,867 | | Cu | 0.531 | 1645000 | 1475000 | 1784000 | 1410000 | 6314000 | 1253000 | 1,611,000 | | | | | | | | | Metal Price | Revenue | | Au Head Grade (g/t) | 2.6 | 2.31 | 2.6 | 2.18 | | $1,819.00 | $84,816,332 | | Ag By Product Revenue | 1038 | 970 | 1338 | 807 | 4153 | $24.95 | $4,153,000 | | Cu By Product Revenue | 6436 | 6025 | 8171 | 6032 | 26664 | $4.22 | $26,664,000 | | | | | | | | | | $115,633,332 | | | | | | | | | | $9,682,000 | | | | | | | | | | $105,951,332 | | | | | | | | | |
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